AAPL for AMZN

[audreyh1]

They even closed above a $1T market cap.

Wow, I think yesterday and today were one of those mothers of all short squeezes.

[kcowan]

We sold off the whole holding a few years ago then repurchased after the dip for half. The dip was 38.5%. Since then we have held on for the ride. 2100 shares!

Asset allocation? Buffet does not believe in it!

[audreyh1]

Quote:

Originally Posted by kcowan We sold off the whole holding a few years ago then repurchased after the dip for half. The dip was 38.5%. Since then we have held on for the ride. 2100 shares! Asset allocation? Buffet does not believe in it!

This is my DHs stash in his IRA. He does not believe in asset allocation for his “play money”, LOL! Half is from 2000, and another quarter from 2008. Rest bought on dips a few years ago.

[OldShooter]

Quote:

Originally Posted by kgtest ... I will tell you what does not go into my decision, emotion. ...

With respect, do you also believe in the Easter Bunny?

More seriously, I suggest the following books:

"Your Money & Your Brain" Jason Zweig
"Misbehaving" Richard Thaler
"Thinking Fast and Slow" Daniel Kahneman

Punch line is that we are all driven by emotion, all the time. Thaler differentiates between emotionless decision makers, which he calls "Econs," and the rest, which he calls "Humans."

All the books are very readable (despite the fact that both Thaler and Kahneman are Nobel laureates),

[kgtest]

Quote:

Originally Posted by OldShooter With respect, do you also believe in the Easter Bunny? More seriously, I suggest the following books: "Your Money & Your Brain" Jason Zweig "Misbehaving" Richard Thaler "Thinking Fast and Slow" Daniel Kahneman Punch line is that we are all driven by emotion, all the time. Thaler differentiates between emotionless decision makers, which he calls "Econs," and the rest, which he calls "Humans." All the books are very readable (despite the fact that both Thaler and Kahneman are Nobel laureates),

Interesting. I suppose they have a point. I'll take a gander, and no, I don't believe in the easter bunny...

[kcowan]

Quote:

Originally Posted by audreyh1 This is my DHs stash in his IRA. He does not believe in asset allocation for his “play money”, LOL! Half is from 2000, and another quarter from 2008. Rest bought on dips a few years ago.

Part of the trouble is that we are now buy and hold and have a diverse set of holdings. But all the flyers are getting taken out. New Flyer at 12.5 now 51. Enercare at 6.48 being taken out at 29. And lots of capital gains with few offsets. Yea I know. Cry me a river!

[Totoro]

Quote:

Originally Posted by OldShooter Punch line is that we are all driven by emotion, all the time. Thaler differentiates between emotionless decision makers, which he calls "Econs," and the rest, which he calls "Humans."

I read them, very useful and fun read.

Still, when I compare my approach to quite a few of my peers I dare say that my emotional component is a lot smaller than theirs in financial decision making (investments).

It's still in there, even when I work at teasing it out. I know for example I tend to not act sufficiently at opportunities that are very clear. Then again, I rather have acts of omission than acts of commission on my 'oops'-track record.

At a micro-scale I readily admit to 'fall' for frequent biases and decisions that don't make sense. Fortunately these tend to not influence my life so much. It's the macro ones that get you, and those get weighed very very carefully.

[OldShooter]

Quote:

Originally Posted by Totoro I read them, very useful and fun read. Still, when I compare my approach to quite a few of my peers I dare say that my emotional component is a lot smaller than theirs in financial decision making (investments). It's still in there, even when I work at teasing it out. I know for example I tend to not act sufficiently at opportunities that are very clear. Then again, I rather have acts of omission than acts of commission on my 'oops'-track record. At a micro-scale I readily admit to 'fall' for frequent biases and decisions that don't make sense. Fortunately these tend to not influence my life so much. It's the macro ones that get you, and those get weighed very very carefully.

I see Thaler in my life too. The fact that humans fear losses more than we enjoy gains is exactly the reason I, like you, don't roll the dice on opportunities that I should be trying to take advantage of.

One of my big ones is Thaler's "Endowment Effect." I own lots of things (not just investments) that it's completely stupid to own. For example, expensive target pistols that I haven't fired in years. But I don't sell them.

IMO it helps to understand what these guys have discovered and explain, but just knowing this does not make me an Econ.

[bobandsherry]

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Originally Posted by Texas Proud APPL has been losing to AMZN for quite awhile... not sure why... but cult investing is strong... AAPL PE ration is less than 20... AMZN is over 220... It is a bit like Tesla... people like the story and buy... right now Tesla has retained earnings of negative $5 billion... Note.. it is $11 bill for AMZN and $92 for AAPL...

AAPL seems poised to stay within their current business model, making no significant acquisitions. AMZN is constantly growing their business, both vertically and horizontally. AMZN continues to have more upside as a result and stock reflects that. I know AAPL has done well, but it seems to be OK with being a one trick pony.

Will be interesting to continue to watch this race.

[Texas Proud]

Quote:

Originally Posted by bobandsherry AAPL seems poised to stay within their current business model, making no significant acquisitions. AMZN is constantly growing their business, both vertically and horizontally. AMZN continues to have more upside as a result and stock reflects that. I know AAPL has done well, but it seems to be OK with being a one trick pony. Will be interesting to continue to watch this race.

The problem is that growth without profit is meaningless IMO...


I keep hearing that sometime in the future they will be able to raise prices and make as much profit as they want... I disagree with that stmt... there are others out there that can compete with them... especially if they start to raise prices... I never see AMZN having the ability to charge much more than normal like AAPL has... I am surprised AAPL has been able to keep that moat for as long as they have...



One big growth area for AMZN is their cloud services... but AAPL has started to get into that space and is growing it quickly...

[kcowan]

Quote:

Originally Posted by Texas Proud The problem is that growth without profit is meaningless IMO... ... I never see AMZN having the ability to charge much more than normal like AAPL has... I am surprised AAPL has been able to keep that moat for as long as they have... One big growth area for AMZN is their cloud services... but AAPL has started to get into that space and is growing it quickly...

I think of AMZN as a big grocery/retail store. They survive on low margins.

Yes Prime has the shipping, movies and cloud spinoffs. But I suspect they will all remain low margin.

AAPL does not sell products. They sell a lifestyle. Until their competitors get that, they are safe. Google has got it but so far has been compromised in getting into the hardware business. Their success with the Android App Store will continue to prevent other smart phone marketeers from displacing AAPL.

I consider Google to have the same problem that Microsoft had with hardware.

[bobandsherry]

Actually, AMZN makes their nut on AWS, not so much currently on consumer sales. Operating income on Sales were basically flat for last year, loss at international region offset the NA contribution. I'm confident Bezos has strategy on making international profitable, similar how he turned losses for NA to profits. When that happens that's additional contribution of over $3 billion to collective OI.

[OldShooter]

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Originally Posted by Texas Proud The problem is that growth without profit is meaningless IMO ...

Not true, actually. After a career in management and executive management I can tell you that there is a time to plow, plant, and fertilize and there is a time to harvest. This is especially true in a growing product line or a growing business.

One of Bezos' strengths IMO is that is that he can ignore the idiot securities analysts for whom quarterly profits are a goal. Bezos believes, and it seems that he is being proved right, that market share and growth are much more important and worthy of aggressive investment regardless of whether that pleases the analyists and regardless of what it does to the P&L. His main concern, IMO again, is going to be generating adequate cash flow to fund the growth, P&L be damned.

[Texas Proud]

Quote:

Originally Posted by OldShooter Not true, actually. After a career in management and executive management I can tell you that there is a time to plow, plant, and fertilize and there is a time to harvest. This is especially true in a growing product line or a growing business. One of Bezos' strengths IMO is that is that he can ignore the idiot securities analysts for whom quarterly profits are a goal. Bezos believes, and it seems that he is being proved right, that market share and growth are much more important and worthy of aggressive investment regardless of whether that pleases the analyists and regardless of what it does to the P&L. His main concern, IMO again, is going to be generating adequate cash flow to fund the growth, P&L be damned.

OK... let me rephrase a bit... growth without any meaningful profit after 10 years is meaningless....


I agree that your farming analogy is OK, but I see no harvesting by AMZN... and none projected in the near future... it is VERY established right now and should be pumping a LOT of profits back into the company... it is not.. which is why the PE is 229!!!



About low margins... Kroger has revenue of $122 billion vs AMZN of $177 billion... Kroger makes a measly $1.9 billion vs AMZN of $3.0 billion which ratio wise is 'close'... AMZN sell for $1823 vs Kroger of $29... so, you are paying a huge amount of money HOPING that AMZN will be able to get their profits up to $90 billion from $3 billion sometime in the future... and I would say near future since you are supposed to discount future earnings to get a stock price... (BTW, that is a 20PE for AMZN vs Krogers current 7.4 right now... if you used that low PE AMZN would need a profit over $200 billion!!!)...



I do not see that happening...

[OldShooter]

Quote:

Originally Posted by Texas Proud ... I agree that your farming analogy is OK, but I see no harvesting by AMZN... and none projected in the near future... it is VERY established right now and should be pumping a LOT of profits back into the company... it is not.. which is why the PE is 229!!! ...

I think we'll agree to disagree on this. As a management strategy, plow, plant, fertilize, and harvest is generally sound and in the scheme of what Amazon has been doing, ten years is not a long time IMO.

But ... a good company is not necessarily a good investment and I think that Amazon's current price reflects that fact that there are plenty of people who do not understand this. This is not new; in the past we had the "Nifty Fifty" and we had JDS Uniphase and the rest of the tech bubble. Same problem, predictable result.

Said another way, Amazon's low profit rate did not cause its P/E to be 229 (or whatever). It is speculative enthusiasm and the greater fool theory that have done that.

[bobandsherry]

Quote:

Originally Posted by Texas Proud OK... let me rephrase a bit... growth without any meaningful profit after 10 years is meaningless....

If you don't like AMZN, what do you think about TSLA?

Quote:

Originally Posted by Texas Proud I agree that your farming analogy is OK, but I see no harvesting by AMZN... and none projected in the near future... it is VERY established right now and should be pumping a LOT of profits back into the company... it is not.. which is why the PE is 229!!! About low margins... Kroger has revenue of $122 billion vs AMZN of $177 billion... Kroger makes a measly $1.9 billion vs AMZN of $3.0 billion which ratio wise is 'close'... AMZN sell for $1823 vs Kroger of $29... so, you are paying a huge amount of money HOPING that AMZN will be able to get their profits up to $90 billion from $3 billion sometime in the future... and I would say near future since you are supposed to discount future earnings to get a stock price... (BTW, that is a 20PE for AMZN vs Krogers current 7.4 right now... if you used that low PE AMZN would need a profit over $200 billion!!!)... I do not see that happening...

I think you need to look into the details of Amazon's operating income to understand where it's making money, and where it's showing a loss. I think you'll then maybe understand better about it's business. Hint. the $177 comprises of sales in North America, sales international and AWS. Another hint, AWS made over $4 billion of operating income. Comparing Amazon to Kroger is just silly.

[bobandsherry]

Texas - this highlights how much Amazon has plowed back into the business.

CapEx by Amazon last year was $12 Billion, $23 billion over the past 3 years. Amazon has already dropped $3.2 billion in CapEx for this year.

And since you compared with Kroger... Kroger spent $2.7 billion last year, $6 billion over past 3 years, basically nothing in 2016.

Just another example of how Kroger and Amazon comparison is just not meaningful.

Amazon CapEx Spending

Kroger CapEx Spending

[Texas Proud]

Quote:

Originally Posted by bobandsherry Texas - this highlights how much Amazon has plowed back into the business. CapEx by Amazon last year was $12 Billion, $23 billion over the past 3 years. Amazon has already dropped $3.2 billion in CapEx for this year. And since you compared with Kroger... Kroger spent $2.7 billion last year, $6 billion over past 3 years, basically nothing in 2016. Just another example of how Kroger and Amazon comparison is just not meaningful. Amazon CapEx Spending Kroger CapEx Spending

If you look it was kcowan who compared it to a supermarket for the low margins... so I went to the largest supermarket for comparison... I was just following that logic showing that if it is in a low margin business then the price is WAY too high... I would not pick Kroger on my own and I do not think it competes with Amazon...



However, I do think it is mostly in retail and retail is a low margin business... it has expanded to AWS which is high margin, but that is still small compared to the rest of the company...

[kcowan]

Quote:

Originally Posted by Texas Proud About low margins... Kroger has revenue of $122 billion vs AMZN of $177 billion... Kroger makes a measly $1.9 billion vs AMZN of $3.0 billion which ratio wise is 'close'... AMZN sell for $1823 vs Kroger of $29... so, you are paying a huge amount of money HOPING that AMZN will be able to get their profits up to $90 billion from $3 billion sometime in the future... and I would say near future since you are supposed to discount future earnings to get a stock price... (BTW, that is a 20PE for AMZN vs Krogers current 7.4 right now... if you used that low PE AMZN would need a profit over $200 billion!!!).

Oh sure! Confuse us with facts!

Don't you get it? AMZN is a stock that promoters love! Momentum baby!

[kcowan]

I agree that AWS and Prime are different classes of business. So we should remove those from their numbers and just compare AMZN retail operations to other successful retailers like Walmart, BestBuy,...?

Do we remove the Fire, Firestick, too? AMZN is really a conglomeration of different businesses, kind of like GE.